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Anni [7]
3 years ago
12

Elite Stationary employs 20​ full-time employees and 10 trainees. Direct and indirect costs are applied on a professional​ labor

-hour basis that includes both employee and trainee hours. Following is information for​ 2018: Budget Actual Indirect costs ​$250,000 ​$400,000 Annual salary of each employee ​$200,000 ​$250,000 Annual salary of each trainee ​$40,000 ​$45,000 Total professional​ labor-hours ​40,000 dlh ​50,000 dlh When a normal costing system is​ used, clients using proportionately more​ full-time employees than trainees will​ ________.
Business
1 answer:
kolezko [41]3 years ago
5 0

Answer:

Since cost per hour of full-time employees is $150, while cost per hour of trainees $27, clients using proportionately more​ full-time employees than trainees will​ <u>be under billed or charged for the resources or labor hour used</u>.

Explanation:

The data in the question are merged and they are first separated before answering the question as follows:

Details                                                  Budget                Actual

Indirect costs ​                                     $250,000 ​             $400,000

Annual salary of each employee ​     $200,000 ​             $250,000

Annual salary of each trainee ​             $40,000 ​               $45,000

Total professional​ labor-hours         ​40,000 dlh ​            50,000 dlh

In normal costing system, actual costs are used.

Therefore, labor hours for each category and cost per hour can be calculated as follows:

Full-time employees total labor hours = (20/30) * 50,000 = 33,333 hours

Each full-time employee annual labor hour = 33,333/20 = 1,667 hours

Cost per hour of full-time employees = $250,000/1,667 = $150 per hour

Trainee total labor hours = (10/30) * 50,000 =  16,667 hours

Each trainee annual labor hours = 16,667/10 = 1,667 hours

Cost per hour of trainees = $45,000/1,667 = $27 per hour

Since cost per hour of full-time employees is $150, while cost per hour of trainees $27, clients using proportionately more​ full-time employees than trainees will​ <u>be under billed or charged for the resources or labor hour used</u>.

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The principle of opportunity cost is taken into consideration when considering starting a sandwich shop, but are comparing that to the idea of staying at your current job.

<h3>What is opportunity cost?</h3>

It is the value or benefit loss when an alternative is selected. The value of the job or product to be dropped will be given up to choose something else.

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3 years ago
The fair rate is 8%. What is 100 per year, forever, worth now?
777dan777 [17]

Answer:

1. $1,250

2. $855.95

3. $3,333.33

4. $92.59

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6. $671.01

Explanation:

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Constant Cash flow every year forever is actually a perpetuity its present value is

PV of Perpetuity = Cash flow / rate of return

PV of $100 Perpetuity = $100 / 0.08 = $1,250

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$100 per year for 15 years

Constant Cash flow every year for specific time period is actually a Annuity  its present value is

PV of annuity = P + P [ ( 1 - ( 1 + r )^-n ) / r ] = $100 + $100 [ ( 1 - ( 1 + 0.08 )^-15 ) / 0.08 ] = $855.95

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Present value of growing perpetuity = $100 / 0.08 - 0.05 = $3,333.33

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5.

$100 once after 10 years

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6.

$100 each year for 10 years @ 8%

PV of annuity = P + P [ ( 1 - ( 1 + r )^-n ) / r ] = $100 + $100 [ ( 1 - ( 1 + 0.08 )^-10 ) / 0.08 ] = $671.01

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